Aegis Vopak Terminals Ltd (Subscribe)

Highlights

Aegis Vopak Terminals Limited (AVTL) established as a Joint Venture (JV) between Aegis Logistics Limited (50.1 pct stake) and Vopak India BV (47.31 pct stake), is the largest Indian 3rd party owner and operator of tank storage terminals for LPG and liquid products for storage capacity contributing to 25.53 pct of India’s 3rd party liquid storage capacity as of 9MFY25.

The company categorises its business into 2 key segments (i) Gas Terminal Division and (ii) Liquid Terminal Division. It owns and operates 2 LPG storage terminals across 2 Indian ports, and 18 liquid storage terminals (of which 2 are for storage of LPG and 16 are for liquids) across 6 Indian ports. These terminals have an aggregate storage capacity of approximately 1.68 mn m3 for liquid products.

They own and operate a network of storage tank terminals with an aggregate storage capacity of 1.50 mn m3 for liquid products and 70,800 MT of static capacity for LPG as of 9MFY25 and contribute to 11.50 pct of the total national static capacity, as of 9MFY25. Their comprehensive storage systems comprise tanks with a designed life of 40 years and can store and handle over 40 different complex and critical products.

The company owns and operates facilities including product storage tanks, firefighting facilities, self-owned pipelines connected to jetty, ship loading and unloading and product evacuation by ship, rail, road and pipelines infrastructure. They handle more than 30 chemicals of various classes and handle more than 10 products of edible and non-edible oil.

Out of the total proceeds of Rs. 28,000 mn, Rs. 6,713 mn would go for funding the capital expenditure towards contracted acquisition of the cryogenic LPG terminal at Mangalore, Rs. 20,160 mn would go towards repayment or prepayment of all or a portion of certain outstanding borrowings availed by the company and ~Rs. 1,127 mn would utilize towards general corporate purpose.

Key Highlights

• In India, fossil fuels supply 95 pct of primary energy requirement. Oil trade and oil imports contributed to 24 pct and 16 pct, respectively in FY24 merchandise trade. Oil trade CAGR was 7 pct for FY19-FY24. Oil imports CAGR was 5 pct for FY19-FY24, while exports CAGR was 12.6 pct. Chemicals trade contributed to 5-6 pct of India’s total merchandise trade value. During FY19-FY24, imports for LPG logged 6.9 pct CAGR vis-à-vis consumption CAGR of 3.6 pct.
• AVTL port terminals typically have long lease periods ranging up to 30 years, providing them with long-term visibility of revenue streams. Their lease agreements require to make lease rent payments to the port authorities (at fixed rate at a particular port/ terminal as per the applicable land policy) determined on a one-time, monthly or annual basis, for the use of facilities at port locations.
• AVTL is expanding their capacity at New Mangalore in Karnataka and Pipavav in Gujarat to increase their LPG storage capacity by 130,000 MT, leading to LPG storage capacity of 200,800 MT. after adding this capacity it will become 25 pct of the total national capacity. Further, they have recently expanded their storage capacity for liquid products by approximately 101,900 cubic meters at JNPA in Navi Mumbai, Maharashtra.
• The company has conceptualized Project GATI to capitalize on emerging market opportunities and to strategically invest in storage solutions and infrastructure necessary to address the market’s evolving demands. For this board of the company has approved expansion projects involving a total capex outlay of approximately Rs. 22.17 bn out of a total outlay of Rs90 bn envisioned by their promoters by 2030, in relation to additional 130,000 MT of static LPG storage, approximately 176,290 cubic metres of storage for liquid products and LPG bottling plants integrated with the terminal at a port location.
• ATVL key growth strategies include (i) Strategically expand network of terminals at existing locations and add new locations (ii) Enhance customer value proposition by expanding infrastructure at existing locations (iii) Invest in capabilities to address alternative energies (iv) Pursue inorganic growth opportunities (v) venture into establishing industrial terminals (vi) Strategically develop inland depots
• In FY24 the company reported sales of Rs. 5,618 mn, rose 59.02 pct YoY. EBITDA grew 74.96 pct YoY while margins expanded 603 bps to 71.19 pct. During FY24 the company posted profit of Rs. 865 mn against loss of Rs. 1 mn in FY23. As of 9MFY25 company registered sales/EBITDA /profit of Rs. 4,642 mn/Rs. 3,534 mn/ Rs. 859 mn which rose 23.65 pct YoY/37.56 pct YoY/154.9 pct YoY.

Key Risk

• AVTL has a limited operating history which makes it particularly difficult for a potential investor to evaluate performance.
• They have substantial capital expenditure requirements and may need additional capital and financing in the future.

Financial Performance

Peer Comparison based on FY24 Financials

Valuation

Aegis Vopak Terminals Ltd., a strategic joint venture between Aegis Logistics Limited India and Royal Vopak of the Netherlands, operates a necklace of 20 tank terminals across 6 key Indian ports like Haldia, Kandla, Pipavav, JNPT, Mangalore, and Kochi. At the upper end of the price band of Rs. 235 the issue is priced at an EV/EBITDA of ~63.26x of its FY25E annualized earnings. The issue looks fully priced. Only long-term investors can subscribe this IPO.

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